Entegris (ENTG) Stock Cools After Q3 Earnings Reveal Record Margins

Entegris came into this Q3 2026 print priced for perfection after a strong 90 day run, with the stock up about 29% over that stretch. Today the air came out fast. The shares dropped about 3.4% to roughly US$154 in regular trading even as the company posted what looks like one of its cleanest profit stories in years.

The real shock is on earnings power. Basic earnings per share landed at about US$1.03 on revenue of roughly US$1.01b, and management highlighted record free cash flow and margins that pushed higher. For a semiconductor supplier long viewed as a quality compounder with a rich P/E, the gap between a red screen and stronger profitability is where this quarter’s story starts.

Love Entegris’ record free cash flow and higher margins, but concerned the stock was priced for perfection going into this print? Compare this setup with our screener of high quality stocks that pair strong balance sheets with fundamental support in the list of solid balance sheet and fundamentals stocks (25 results).

Q3 2026 Earnings Summary

• Revenue (Q3 2026 vs. Q3 2025): US$1,005.7m vs. US$807.1m (+24.6%)
• Net Income (Q3 2026 vs. Q3 2025): US$157.8m vs. US$70.5m (+123.9%)
• Basic EPS (Q3 2026 vs. Q3 2025): US$1.03 vs. US$0.46 (+121.9%)
• Adjusted Gross Margin (Q3 2026 vs. Q3 2025): 48.9% vs. 43.6% (+530 bps)

Earnings tell you how Entegris is performing this quarter, but cash flows tell you what investors are really paying for. On Entegris' cash generation alone, the stock could be a hefty 37% overvalued.

Entegris bull case: AI content thesis meets hard numbers

The bullish story hinges on Entegris turning AI and advanced nodes into richer content per wafer and stronger unit driven momentum.

"Rising AI related demand for advanced logic, HBM, DRAM and higher layer NAND is increasing Entegris’ materials and filtration content per wafer and is already visible in double digit growth in liquid filtration, CMP pads, advanced deposition materials and selective etch chemistries, which can support further revenue and gross margin expansion as these nodes scale."

Q3 shows this playing out. Revenue reached US$1.01b with unit driven revenue around 20%, APS grew 31% and MS 16%, and adjusted gross margin hit 48.9%, the highest in more than 25 years. Backlog more than doubled year on year, which supports this AI content thesis.

Entegris bear case: execution and cash flow risk under review

Bears worry that operational projects and cash discipline might slip just as expectations peak.

"The main thing that has to go right is that Entegris maintains its margin and cash flow progress by successfully ramping newer facilities, closing dilutive operations, and using its existing manufacturing capacity while keeping capital spending disciplined."

Recent data leans supportive. Adjusted EBITDA margin reached just over 30% on record free cash flow of US$224m. Capex for 2026 is guided to about US$200m, roughly one third lower than the prior year, and net leverage fell to 2.9x after full repayment of the 2029 term loan. KSP Taiwan also reached gross profit breakeven, easing ramp risk.

The price and this Narrative do not agree. → Uncover what this Narrative says Entegris is actually worth.

Hunt For Disconnected Fundamentals

Entegris just showed how strong execution can still meet a cooler share price in the short term. The real opportunity sits in finding stocks that could be undervalued before the market corrects them.

• Company 1 - 20% below our estimate - grows account, card and asset balances while integrating its platform into banks processing rising transactions.
• Company 2 - 22% below our estimate - wins major electrical infrastructure projects for new data centers as clients expand power and communications capacity.
• Company 3 - 35% below our estimate - sells GPUs and software that developers continue standardizing on for demanding AI workloads despite alternatives.

Three companies from the same screener. Open every one of the 29 undervalued companies on it →

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